New York, NY – $470 Million City Error Puts Charities in Chaos


    New York, NY – Mayor Michael R. Bloomberg prides himself on running an administration skilled at untangling the bureaucratic maze of one of the world’s great metropolises.

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    But a mistake in how the city planned to distribute $470 million for programs for children – ranging from family counseling to AIDS education – has left charities across the city in chaos.

    At the Jewish Child Care Association, plans to recruit 30 foster families to care for sexually exploited or severely disabled children are in limbo.

    “It’s just a devastating blow,” said Richard Altman, chief executive of the association. “It essentially leaves us in no man’s land.”

    Social services advocates said they could not remember a time of such widespread confusion in the world of child welfare, and some called the error one of the biggest blunders of the Bloomberg administration.

    The distribution of money was the focus of intense scrutiny even before the city acknowledged its error. The city solicited proposals for its pot of $616 million last year as part of an attempt to restructure the child welfare system and re-evaluate contracts, some of which had originally been issued nearly a decade ago.

    After an evaluation that ended in April, nine providers were told they would be denied money, and 63 were told they would get awards, for a total of $470 million. An additional $146 million was unaffected by the city’s error.

    When officials at the Administration for Children’s Services received a complaint – city officials declined to say from whom – about how the money was distributed, they discovered that evaluators had bungled how they judged proposals. They had failed to give adequate weight to the community ties of groups vying for funds.

    John B. Mattingly, commissioner of the Administration for Children’s Services, said the agency was redoing the entire process after rescinding three-quarters of the awards announced in April. He said his staff was working to minimize the consequences and was extending existing contracts.

    The city “came forward immediately and admitted the mistake,” Mr. Mattingly said in a statement. “We are working with all of the providers to assist them during this transition.”

    A spokesman for Mr. Bloomberg said the more than a dozen staff members at the city’s child welfare agency involved in the mistake had been retrained in evaluating proposals but would face no disciplinary action.

    The mistake could severely hamper the ability of dozens of charities to plan for the year ahead and might endanger the financial stability of smaller groups.

    Some organizations have been forced to rein in visions of expanding foster care programs and extending service to more struggling families. Others were in the midst of phasing out programs because they believed they would not receive city money.

    At the Harlem Dowling-West Side Center for Children and Family Services, a charity that coordinates foster care and adoptions, layoff notices went out to 12 staff members, including case workers and supervisors, when the center learned in April that it would lose a $1.3 million city contract from its $13 million budget. Staff members had been working swiftly to close as many cases as possible and refer families elsewhere.

    Dorothy Worrell, the organization’s executive director, has halted the layoffs for the moment, but she said the uncertainty was hurting morale among workers and families.

    “We actually interrupted families’ lives and said, ‘Hi, I’ve been working with you for ages and you’ve shared your most intimate details with me, but I’m going to hand you off to someone else now,’ ” Ms. Worrell said. “That’s an unsettling thing to have to do.”

    Nonprofit groups are facing an added degree of stress because the city has not yet indicated when it will complete the re-evaluation, or for how long existing contracts will be extended.

    “We have no idea what the city is going to do,” said Mr. Altman of the Jewish Child Care Association. “I can’t really tell my board of directors with any kind of certainty what our programs are going to look like going forward.”

    Mr. Altman’s staff had begun recruiting foster parents and interviewing workers for a new program for victims of sex trafficking and medically fragile children. The program has now been shelved.

    For some groups that were told in April that they would lose lucrative contracts, the confusion has brought relief – albeit temporary.

    At Safe Space, a nonprofit organization that offers programs for at-risk youth, the city’s decision to extend contracts means a planned 45 percent cut to the budget at its branch in Jamaica, Queens, will be delayed.

    “From the perspective of the families, that’s not a bad thing,” said Christine Molnar, president and chief executive of Safe Space.

    But Ms. Molnar said there would be damaging effects, including difficulties in securing lines of credit without a new city contract to serve as collateral.

    “I need to have working capital to be able to draw on to pay bills on a regular basis,” she said. “I can’t afford these hiccups in revenues.”

    One of the nine organizations that had been denied city financing, Little Flower Children and Family Services of New York, an 80-year-old Roman Catholic foster care agency, sued the city last month after it did not receive an award. It accused officials of emphasizing the quality of proposals over groups’ experience.

    Now that the city has decided to redo the process, Little Flower has withdrawn its suit.

    Proposals are evaluated based on three criteria: experience, organizational capacity and the quality of the proposal. Ties to the community are supposed to be considered for each of the criteria, but the city’s reviewers erred by considering community connections a separate category.

    Comptroller John C. Liu, whose office approves the extension of the existing contracts, has called on the mayor to offer more details on how the error occurred.

    Alan van Capelle, deputy comptroller for public affairs, said, “We’re just deeply troubled” by the size and the magnitude of the error. “The care of children can’t take a pause for bureaucracy,” he added.

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    Grant writer
    Grant writer
    13 years ago

    The problem is NOT how well-written the proposals are OR who does a good job. All proposals are meritorious. It’s which organizations have the contacts & the best relationships with those in charge. It’s not WHAT you know (or how well you can deliver) it’s WHO you know. Which is why some of the worst programs by the most inefficient organizations are funded & new, dynamic organizations don’t even get their applications read.

    A few years ago we were asked to write a grant application for a City agency. We had a great contact in the department & we approached him. He told us off the record not to bother applying, it was already decided the contract was going to the South Bronx. Sure enough, that’s what happened.

    We have written superb applications which haven’t been funded. Similarly, some of our clients have been given the nod to apply & they sailed through; these proposals were also excellent, we only know how to produce quality;) Unless you are on the right side of the powers-that-be in city grants, if you are a fledgling organization or you don’t have connections, fuggedaboudit! Community connections…a smokescreen/excuse. In the Jewish community, these are very clear.

    13 years ago

    Wow, it sounds like you are really on the inside of this!

    As a parent who has dealt with several large not-for-profit organizations, this is very disconcerting. I resent the top heavy salaries and the fact the what filters down to the clients seems miniscule compared to the operating costs. Is this true in general?

    I think the party is over for many of these organizations and I don’t think they will ever see the kind of funding that they have become used to again. Remember the financial crisis hits everyone.

    I am only sorry that it will probably be the clients who get hit the worst.

    Yankel Pipik
    Yankel Pipik
    13 years ago

    These organizations would do very well financially if they told the city that they would Daven for them without interruption for 40 days at the Kiosel.

    Grant writer
    Grant writer
    13 years ago

    #3 reminded me…everyone wants to “write in” salaries. That shouldn’t work anymore. It should be all about direct service. Programs shouldn’t be about lining the pockets of administrators, but rather, about providing programs to those in need. There’s too much “pork” in the grant system, at least in government funding. I know, I read the RFP’s (which, incidentally, are often hundreds of pages long & so repetitious they discourage smaller organizations from applying. Again, another way of disenfranchising genuinely effective applicants.) I could name so many Jewish organizations which are ignored by City, State & Federal govt officials (including our best-known Jewish ones!) simply because they are small.

    Tell me, Dov, Anthony, Shelly, David…how are these incredible organizations ever going to get “big” enough to give YOU the publicity you crave when you won’t give them a leg up? Note the Met Council (BIG, fancy, prestigious organization) getting a grant to study what makes teens at risk. If that isn’t disgusting, I don’t know what is!

    13 years ago

    there are those that are worth every penny of their salaries.
    i have reached out to specific places with prople in need and have been helped time and time again. some of those ceo’s work 7 am till 9 pm 6 days a week.
    as i said, some are worth it and some may not be.
    i can vouch for those i have dealt with.
    and if i was a billionaire i would give those people a raise too.

    13 years ago

    to the above posters, I do not know to which Organization(s) you are reffering to, as I do not have any inside information to most of the organizations.
    however, my parents are involved with a famous organization, which is well known. What I here from people on the street, that my Mother makes some 500,000.00 per year, is absurd. It is a untrue, however our neighbors, ‘know’ it for a fact. everyone to whom I speak regarding this, also knows it. But that is far from the truth, being an executive, which pays for all travel expenses, and is on call 24/7. gets calls day and night, has to attend to emergencies. all for 800-900 dollars per week? this is an executive! She is the one that hires all the staff.
    do you think that Agencies do not get audited? the Goverment would allow wages that are seen on Wall Street?